Anxiety, Uncertainty and the 2020 Election

The Great Wave by Hokusai. I am not subtle with metaphors.

In full disclosure, there is no way in frozen hell I would vote for Trump. This post is primarily for the motley band of misfits in the Biden coalition (skeptical leftists, moderates who don’t like racist dog whistles, or even conservative institutionalists) anxious about the election.

Compared to other content I’ve written on this blog, this post is less analysis-oriented than my finance posts. I want to lay out perspectives that may reduce some of the existential dread many people are going through in the last few days before the U.S. Presidential election.

In this post I explain why regardless of outcome you should have less anxiety about the results and why I think that this election will be a Democratic sweep of the House, Senate, and Presidency.

The Coin Lands On Tails

Let’s say Trump wins.

After 2016, I briefly considered purchasing firearms and readying myself for a descent into civil violence. I don’t have that fear anymore, and although it’s clearly not my preference, I am less fearful of a second Trump administration. After four years I have capped my downside risk. For all of Trump’s spectacle, his first term has generally been indistinguishable from any other milquetoast Republican (tax cuts, deregulation, pro-dirty energy, anti-choice). The media is sensationalist and tends to focus on style over substance.

How have you or your local community directly been negatively impacted by policy decisions of the Trump administration? The mishandling of the pandemic is the most egregious error for most Americans but ultimately, the most pernicious aspects of the Trump administration (ICE detention centers for example) create acute pain for the few and marginally impact the majority.

There is an asymmetry between how much politics impacts your day to day life and the magnitude of interest people have in politics. People with less access to healthcare, good jobs, and affordable educations are also generally the people who are less likely to participate in U.S. politics. My intuition is that this occurs not only because political leadership over the last 30 years has not met the needs of the average citizen but because non-voters value solving their own problems versus fixating on abstract and diffuse benefits from federal policy and the contemporary media circus. This not to say people should give up on correcting issues in government but it’s worth considering that people with much more at stake in elections actually value politics less.

The most likely outcomes in my mind a major Biden victory and narrow Trump election, will likely result in an extremely similar world to today 6 months from now. Any momentary spikes in happiness of sadness you feel after next week will eventually dissipate. In the long run, the nature of nostalgia in our brains means we will likely remember this period much more fondly than we experience it today. We fundamentally undervalue our own ability to adapt to new situations and overemphasize our ability to successfully predict negative futures.

Trump Is the Symptom Not the Disease

Part of the reason liberals are so motivated (and anxious) to defeat Trump is because it’s taken for granted that he is a singularly terrible president who will destroy the U.S. if elected again. Overall, I think is overrated. I want to list some common arguments and provide a counter opinion.

Trump’s racist populism is dangerous to democracy

If you think about democracy in terms of the share of people who vote and the amount of people who care about politics we are in a golden age of democracy in the U.S. Democracy is inherently volatile because it reduces the degree of separation between citizens and those in government. Political historians since Plato have warned about this feature of instability. Do not mistake the extremeness of discourse for a decline in democracy. In fact this divisiveness could be helpful and corrective in the long run. Hypothetically, what was the best period for U.S. politics? Would you say that is before the civil rights act, the red scare, or perhaps when we were concerned about Bill Clintons libido? The Women’s March in 2017 was perhaps the largest political rally in American history. Trump has inspired unprecedented political activism.

Trump has irreparably destroyed our government institutions

Many of our institutions are in fact extremely flawed with or without Trump. In 2009, the Obama administration Justice Department delivered zero convictions for the criminal fraud committed by Wall Street in the financial crash. In 2016, James Comey’s FBI department decided to politicize Hillary’s email transgressions but not reveal similar investigations with the Trump campaign. In 2017, after years of collecting domestic email traffic because it contained “potential foreign targets” the NSA agreed to stop spying on average Americans. In 2020, the Federal Reserve printed trillions of dollars in the name of quantitative easing to backstop corporate banks. In each of these instances, these institutions were acting in their own technocratic or even political rationale. Trump’s overt political pressure on these institutions does not mean that there is not rife corruption or special interest in these institutions. It is not a given that the structure of these institutions needs to be preserved. For example, although Trump has gutted the State Department and diminished the intelligence agencies, it is also worth noting that Trump is the first president in contemporary history to not expand or start new wars, perhaps due to this reduced influence.

Trump’s re-election means that reform for inequality (police reform, legal reform, economic equality) will be buried

Local media (particularly newspapers) declined dramatically since the 1990s and the advent of the internet. As a result, we tend to gravitate to national politics but underrate what our local councilmen and councilwomen are doing. In fact, for all of the rightful criticism of Biden’s vote on the 1994 crime bill much more about crime and policing occurs at the state level. As a thought experiment, consider why a city like San Francisco would likely support a national UBI (universal basic income) but is incapable of passing a local bill to reform local property zoning to create more affordable housing. There is currently a scale invariance in American politics where people in local communities do not vote for progressive policies that could occur real costs in their place of residence. Increased policy diversity at the local level (for example raising minimum wages, raising certain taxes, reducing them in others) will lead to better national governance as certain local experiments succeed or fail.

Trump is the main reason our country is more divided

I tend to agree that a president who was less caustic would make political debates better. However, I think the fractious nature of contemporary politics is the result of a natural breakdown of the previous order. After the conclusion of the Cold War, politics entered the “Washington Consensus” era which was marked by both parties agreeing on free trade, deregulation, delegating governance to technocrats (for example the independent Federal Reserve) and the support of international institutions. Republicans and Democrats engaged in broadly similar neoliberal policies. The shocks of the financial crisis in 2009, the election of Donald Trump, and the economic repercussions of COVID-19 have discredited this consensus. People, (particularly younger people who have grown up with this instability) are seeking alternative solutions due to rapidly increasing wealth inequality, economic stagnation, and looming threat of climate change.

We are in a period of turbulence and realignment which needs to occur to form a new convergence on politics. This is inherently an ideological process which is a more acrimonious and transformative of a debate. Economics and politics are not hard sciences but philosophical disciplines applicable to the real world.

This google trends chart emphasizes the declining of interest in previous aspects of Washington Consensus. Globalism in the form of the U.N. and free trade have declined precipitously while interest in socialism has risen particularly during the trio of shocks (financial crisis, 2016 election, and COVID-19).

Forgetting the Upside

Our lived experience is singular but potential outcomes are probabilistic and humans over emphasize extreme negative risks. The stress we feel about the election impacts us psychologically the same way physical real-world threats affected our primate ancestors. As a biological adaption, this paranoia is useful for survival. In the context of largely uncontrollable real-world phenomena it creates unsolvable anxiety. The polls show a healthy Biden lead but many people I have spoken to obsess about negative tail risk and a Trump victory. However, in probability there are also positive tails. If polls are accurate Biden is already leading in traditionally red states like Georgia, North Carolina, and running competitively in Texas. Texas!

Hypothetically, if extreme outcomes are more or less probable on either side of the average, it’s worth also taking into consideration positive outliers when facing anxiety about the downside. Examining the trendline of polls and Democratic turnout and overperformance in 2018, there is a case to be more optimistic. The comparative lack of conversation about a dominant result for Democrats is a result of recency bias. Just as it was inconceivable that Trump could win in 2016, it seems more likely Trump could reverse the odds and pull out another victory in 2020 based on his own precedent. Today the media acts like Trump is an unkillable Teflon-coated political zombie who will win no matter how bad the polls are or how sharply COVID cases are spiking. Next week if the opposite happens, we will engage in a media cycle of how it was very obvious Trump was going to lose very very badly.

A Humble Prediction

I like to look at this election in terms of most likely possibilities.

I think it is unlikely that pollsters will be as wrong as in 2016 simply because two bad results in a row is an existential risk. For all the skepticism we have about polls today, pollsters would completely lose credibility in 2024 if they were as wrong as 2016. This is a dramatic economic motivator to not fuck up. As a result I think the polls if there is bias, are under reporting Biden.

Early voting reduces the volatility of late deciders. Since a large proportion of votes in this election are happening early or through mail-in ballots a large percentage is locked-in. Early voting skews heavily Democratic meaning Republicans need to make up a large proportion of votes on election day.

Democrats and left leaning independents are more motivated to win this election. The paranoia is firmly with the left in this election unlike in 2016. Donald Trump has tended to poll around 40-45% favorable throughout his presidency, never expanding his base beyond committed supporters. In such an environment can Republicans expect their (older) voters to brave lines and risk potential COVID infections to over-deliver on election day? Even a marginal drop in Republican votes leads to a massive Biden win because of the early voting advantage.

Finally, COVID-19 and the connected economic fallout will be directly attributed to the incumbent. Just as the presidents get credit for booming economy, the inverse happens when the economy is in a recession. Economic pain shows up in the polls, and one early inkling I see is the polling in Iowa. Trump’s tariff policies have hurt farmers and it’s made him less popular in a state that Trump won by 10% in 2016 (538 has Biden marginally ahead). As people spend the umpteenth week quarantined at home, who will they blame? In 2016, Trump could reasonably play the outsider, a rejector of Washington conventional wisdom (particularly of hurtful free trade policies), as a known quantity with severe deficiencies will voters stay loyal or drift away? As narrow as Trump’s victory was in 2016 he’s done little to expand this political coalition as many headwinds appeared.

So in danger of appearing foolish for posterity, I am predicting a Democratic sweep of all three branches of the federal government.

I hope you have found this post interesting. I write weekly about a variety of topics related to politics, technology and finance. Please subscribe to receive a weekly post direct to your email inbox.